China rail builders unhappy with Putrajaya for delaying Gemas-JB link

By Debra Chong

January 17, 2012

KUALA LUMPUR, Jan 17 — Three Chinese companies shortlisted to build the RM8 billion Gemas-Johor Baru rail link have fallen “victims” to Malaysia’s changing political leadership, the South China Morning Post (SCMP) reported.

The English-language daily in Hong Kong reported yesterday that the Chinese firms were unhappy with Putrajaya’s 10-year-long delay in building the track, which they blamed on the country’s changing political guard since the administration of Tun Dr Mahathir Mohamad, but which they could do little about.

It added that the issue was likely to become a power play within the ruling Barisan Nasional’s (BN) lynchpin party Umno, as the next election draws nearer. The BN’s mandate expires in March 2013, but many have said it will called this year.

File photo of a Beijing-Tianjin Intercity Railway train at the station in Beijing on August 1, 2008. Three China companies are bidding to build the Gemas-Johor Baru rail link. — Reuters pic

China Railway’s state-owned parent firm China Railway Engineering Co (CREC), China Railway Construction Corp (CRCC) and China Communications Construction (CCC) have been promised big-money contracts to build the 197km double-track electric rail linking Gemas in Negri Sembilan to Johor Baru but the government has been pushing announcing who will get the main contract, said the Hong Kong daily, controlled by Malaysian tycoon Robert Kuok family through its Kerry Group.

“The Malaysian project has been delayed for 10 years. It was approved by one Malaysian leader, but then new leaders took over from the old leaders, and the new leaders wouldn’t approve the project,” the paper quoted China Railway Group’s chief financial officer Li Jiansheng as saying in its article published yesterday.

“We will keep talking to the authorities. We will never quit chasing this project. But we still don’t know when it will start,” he was reported to have added in the SCMP article titled “Chinese railway builders hit by Malaysian politics”.

It also quoted an anonymous transport analyst as saying: “CREC is not happy with Malaysia in light of Gamuda-CRCC’s attempts to get the Gemas-Johor Baru railway project.”

The industry observer told SCMP that some local politicians have been lobbying Prime Minister Datuk Seri Najib Razak on which contractor should be chosen for the RM8 billion project.

“With the Malaysian general election expected later this year, the matter has become part of a power play within Umno,” the transport analyst was quoted as saying, adding that a senior CREC executive would be raising the matter with Malaysia’s top leaders in a visit here next month.

The SCMP said it understood that “the Malaysian government had been trying to dictate to the Chinese government which Malaysian company the Chinese contractor should partner with”, attributing the information to its unnamed analyst.

Najib had announced that the Gemas-JB project would be given to a Chinese contractor when China President Hu Jintao visited here in 2009.

The paper highlighted that under Malaysian law, foreign firms are required to partner local infrastructure construction companies for such projects.

Citing government sources, Business Times reported today that Putrajaya will announce the winner only in March.

The Malaysian Insider had reported last December that Putrajaya has agreed to award a Chinese firm, most likely Chinese Road and Bridge Corporation (CRBC), with local partner Gamuda Bhd a multi-billion ringgit contract to build the Gemas-Johor Baru electrified double-tracking project (EDTP), instead of frontrunner CRCC.

The Malaysian Insider understands the project is worth between RM7 billion and RM8 billion after it was put under a mid-term review in the Ninth Malaysia Plan.

The Gemas-Johor Baru sector would be the final package for the EDTP, with the other sectors being the Ipoh-Padang Besar and Seremban-Gemas lines.

“Putrajaya has decided on China Road and Bridge Corporation after some last-minute lobbying,” a source told The Malaysian Insider.

Another source said the award could be a wrinkle in Putrajaya-Beijing ties as only CRCC is authorised to tender for rail-related projects abroad. “The decision has been made and will be announced very soon,” the source disclosed.

Putrajaya and Beijing maintain very good political and business ties, with China taking palm oil and other commodities apart from a flow of goods being traded under the Asean-China Free Trade Agreement (FTA).

The Gemas-JB link is part of a larger Trans-Asian rail link between Singapore and China.

The project includes building nearly 200km of parallel railway tracks, including stations, depots, halts, yards and bridges and cover systems such as electrification, signalling and communications. This includes a realignment between the Pulau Sebang, Malacca and Gemas section.

Transport Minister Datuk Seri Kong Cho Ha said in July last year that the Gemas-Johor Baru stretch was already in the final stage of design but declined to state if the tender would be open to foreign parties when it is completed by the end of the year.

He said the EDTP in the northern section was slated for completion by end-2013 and the line to Johor by 2016.

In May 2009, Global Rail Sdn Bhd, a relatively small contractor, and its Chinese partner, China Infraglobe, submitted a proposal to Putrajaya to build and upgrade tracks from Gemas to Johor Baru at a cost of RM5 billion.